Harvard learns management lessons from India Inc.

In this issue:
» India Inc will have to postpone its expansion?
» Is India on the brink of a grain storage crisis?
» Karnataka crowned India's 2nd preferred investment destination
» The biggest risk to global recovery
» ...and more!

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00:00

Who has not heard of Harvard University? Nearly every management professional has aspired to be a student of the prestigious Harvard Business School (HBS). Therefore it would be interesting to know that the HBS uses India Inc as case studies to impart management lessons to its students. That's right. Over the years, the phenomenal success of Indian companies has landed them in the form of case studies for business schools all over the world. And HBS is no exception to this.

As reported by a leading daily, nearly 120 plus Harvard case studies from South-Asia are India centric. Reasons for this are several. The phenomenal economic growth rates spanning two decades. The growth of a significant middle-class. And most importantly, the increased presence of global firms in India and vice versa. Therefore, it is little wonder that the world's most prestigious management schools are lining up to draw lessons from the various success stories. Professors are using these lessons to fill in the specific needs in their course syllabus.

But this is not just one way traffic. Indian companies too are benefitting from becoming case studies in such universities. These universities typically take in some of the best minds in the world as students. These students come up with innovative approaches and solutions to some of the problems that the companies are currently facing. For example, Eureka Forbes, an Indian water filtration device manufacturer, drew an important learning on how to lower the cost of its water filters. Many companies, including the likes of TCS have drawn on these learnings to improve their business processes further. Becoming a case study also helps them in garnering international exposure which is essential for companies aspiring to be significant global players.

The truth is that India Inc has taken on the challenge of operating in India and expanding outside of its boundaries in its own unique way. And the world has now realized this fact and is taking notes.

Do you think Indian companies would benefit if they become case studies for business schools like the Harvard Business School? Share your comments with us or post your views on our Facebook page.

01:15		Chart of the day

Internet penetration in India may not be very high. But even then it has been ranked amongst the top 5 internet users in the world. As shown in today's chart of the day, Indian users form nearly 4% of the total internet using population of the world. China takes the crown on the list with its users forming almost 12% of the total global users. India ranks fourth on the list, marginally below Japan.

Data source: Internetworldstats

01:45

So, the RBI does it again. Recognising that inflation in India is far from being tamed, it wielded the axe one more time and went in for another round of rate hike. India Inc though isn't amused at all. It feels that India's inflation is mostly commodity led and hence, cannot be accounted for by monetary policies. Furthermore, the corporate have also argued that it isn't demand alone that is falling. Few months down the line capacity growth will also get affected. This is especially true for companies where expansion takes place predominantly by borrowed funds. For example, a head honcho of a leading infrastructure company believes that for companies looking for a debt instrument, the latest hike is no less than a death sentence. Thus, the writing seems to be on the wall. RBI's move, by halting expansion plans of India Inc, could well lead to a growth deceleration in the near term. Of course, it is a risk that the Indian central bank is quite willing to live with. The other option of having a high growth but that of a poor quality just doesn't cut with it. And this is exactly how it should be we believe.

02:25

After a poor season in 2009 and a relatively better season in 2010, the timely advent of the monsoons this year must have led the Indian government to breathe a sigh of relief. After all, 60% of the country's population is dependent on agriculture and allied activities and thus a good spell of monsoon would certainly bolster farm output. Not just that, increase in foodgrains production will help improve supply situation and contain high inflation of over 9%. The Agriculture minister is also of the view that if good rains continue, the country is likely to harvest a record 102 m tonnes of rice in the 2011-12 crop year (July-June). It must be noted that the IMD has forecasted that rainfall during the four month season was 'most likely' to be normal this year. This would be at about 98% of the Long Period Average, with a model error of plus or minus 5%. Food inflation has been persistently high in India for quite some time now as a result of which the overall inflation has also risen. While the rise in farm output should ease off some pressure, the government will also have to ensure that there are adequate storage and warehousing facilities for foodgrains. After all, apathy on the part of the government in this regard has also done its bit in fuelling food inflation.

03:00

Talking of food storage, things don't look good on this front. Just like last year, there is again a massive pile up of grain inventory. With the 'kharif' harvest about to hit the markets around September, we could be witnessing yet another grain storage crisis. Such a crisis could have a severely affect the livelihood of farmers. This is turn would have a significant impact on the overall economy given size of population engaged in farming. Therefore, if quick action is not initiated on this front, then India will continue to bear the brunt of such a storage crisis. And, of course, food will continue to cost dearer.

03:35

Newly elected Chief Minister of West Bengal, Ms Mamta Banerjee has been trying to position Bengal as a preferred investment destination. Ms Banerjee has stated that her government would put in all efforts to restore work culture in the state. But as a matter of fact, Karnataka has now become the second choice of investors after Gujarat. The Associated Chambers of Commerce and Industry (Assocham) ranked Karnataka as the second top investment destination in India. Karnataka has 1,528 projects valued at US$ 203.1 bn as compared to Gujarat's 1,455 projects worth US$ 297.7 bn. Majority of the projects are in the field of manufacturing and service. However, power still is an issue in the state due to shortage and poor quality of supply. Government's focus on developing micro, small and medium enterprises and backward regions through the public-private partnership mode would help the state.

04:05

Two years after the crisis, the global economy is back in the doldrums. Stock prices globally have been falling as a consequence, with people moving out of risky assets. The Japanese earthquake shattered the global recovery early this year. This sent the nation's GDP downwards, and broke global supply chains. Global demand was also affected by high oil prices thanks to the Middle East political crisis. Emerging market economies like India and China are also suffering from rampant inflation. This has forced them to tighten their monetary policy, and will sacrifice short term growth. Politicians are the first to take advantage of a gloomy outlook. The US is between the devil and the deep sea. Republicans don't want higher taxes. Democrats will not accept spending cuts. There is a danger that the country will have to either make cuts or be forced into a default. In Europe, Germany and the European Central Bank (ECB) are facing a standoff over Greece. With so much uncertainty on the horizon, companies are sitting tight on cash. They are also holding off on hiring or expansion plans. Now, unless strong decisions are made by our leaders, a sustained global recovery may just be a pipe dream.

04:40

Meanwhile, Indian stock markets are treading the negative territory after opening the day on a positive note. Technology stocks have weighed the markets down. At the time of writing this, the benchmark BSE Sensex was trading lower by 63 points (down 0.4%). Nearly all the major Asian stock markets were trading in the red as well with Korea and Indonesia being the top losers.

04:55

Today's investing mantra

"Time is the friend of the wonderful company, the enemy of the mediocre." - Warren Buffett